Transcript

Profits came in at $612 million, up 39 per cent on last year, and the company has plenty of work in hand.

I spoke to Leighton’s CEO Wal King about the way ahead and how policy is impacting infrastructure, mining and resource markets.

Wal King, welcome to Lateline Business.

WAL KING, CEO, LEIGHTON HOLDINGS: Thank you.

TICKY FULLERTON: Well the market loved the results today. That must feel particularly good given the slide that Leightons have had of 24 per cent over the year so far?

WAL KING: Oh, well, I think it reflects the positive nature of the company. I said that the results really affect - reflect I think Australia's place in Asia. I mean, Asia is developing. This is gonna be Asia's century and if you look at the work order and the momentum and the cash flow, a net cash flow of $1.74 billion for the year's really an excellent result.

TICKY FULLERTON: Presumably the market will also have liked your timely announcement from your subsidiary Thiess on the Hunter Expressway?

WAL KING: Well that's all been factored in. We have at the close of the year a $42 billion - or $41.5 billion worth of work in hand. I've continually said that the work in hand is upwards and the momentum is in that direction.

We have about $10 billion worth of work where we're preferred bidder on - that's like one-on-one negotiations. And we have another $20 billion worth of work that we have a high probability of winning.

So, I mean, our aspirational goals of having a $50 billion order book by 2014, 2015 we think is very, very realistic and achievable. So the company's got a lot of momentum.

I think at the half year they were marked down because we were a bit shy of the amount that was expected in terms of work in hand. But we're not about 30th June dates; we're about a momentum, a forward momentum. And the company has a huge amount of momentum in its work in hand and its opportunities coming towards it.

TICKY FULLERTON: You said in your outlook to watch for a rocky road as we all get through the financial crisis. Have you got any particular concerns there?

WAL KING: Well, like any major earthquakes, there's residual effects, and, you know, we have residual effects in our property market and also in the Middle East. But over time that will subside and I daresay in three or four years we'll look back on the global financial crisis as a blip in the development.

But I think the world is changing at a very rapid rate. And Asia is becoming more important. I think the GFC has actually accelerated the move towards the Asian century.

TICKY FULLERTON: Your contract mining side is going obviously very well. How do you see the whole mining tax drama from your point of view, and if Labor wins the next election, what sort of an impact will the mining tax have on you?

WAL KING: Well I think the tax was a drama. You said the word drama; it is a drama. I mean, the way it was approached, the abrupt nature of it, without proper consultation, really undermined confidence and I think the sovereign risk in Australia has increased, either in perception or reality, but at the end of the day, perception becomes reality.

Big mining companies are looking at elsewhere investing in the world. I don't think anyone likes the surprises. Australia has a huge amount of resources and will be a continued provider for the resources that are needed to power the world along.

But Australia hasn't got resources to itself. I mean, there is other places in the world to invest, as we see in Mongolia. Mongolia is developing very, very rapidly, and we believe that within a few years we'll be doing 30, 40 million tonne of mining of coal there and that'll be in direct competition with Australia.

We already have orders to move to 20 million a tonne of year. So, every tonne of coal taken from Mongolia is direct competition with Australia. The concept that Australia has the resource on its own and should be milked is just a ridiculous proposition.

TICKY FULLERTON: Wal King, as someone who sees infrastructure as so vital to driving the economy, the Government's Building the Education Revolution program - do you think the sort of failings that were found by Brad Orgill were to be expected in a rollout of that kind?

WAL KING: Well I think you have to keep a balanced perspective. I think the balanced perspective says that stimulus was needed. It was rolled out very quickly and there have been some imperfections found. But I think the concept of blowing those imperfections into some sort of gigantic space is wrong.

You've gotta take a balanced perspective. And I think in the main the stimulus package was good in providing infrastructure and the like, but there has been some problems.

TICKY FULLERTON: And finally your chairman David Mortimer thought it important enough to write a response to the Australian Stock Exchange today about an Australian newspaper article on succession planning. We all know you're irreplaceable. Was it the share price and the impact on it that he was concerned about?

WAL KING: Well, the papers, the media think it's a great topic to engage in about speculation planning. I'm just doing my job. And one day, as I've said, every day's closer to rain like a drought. You know, one day I will retire.

TICKY FULLERTON: Will there be any news on this at the AGM for shareholders?